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Segment Reporting (Tables)

9 Months Ended

Nov. 02, 2019

Summary of Statements of Income Metrics Reviewed by CODM to Evaluate Performance Internally or As required under ASC 280 - Segment Reporting

The following tables presents the statements of income metrics reviewed by the CODM to evaluate performance internally or as required under ASC 280—Segment Reporting (in thousands):


	Three Months Ended
	November 2,						November 3,
	2019						2018
	RH Segment		Waterworks		Total		RH Segment		Waterworks		Total
Net revenues	$	645,378	$	32,148	$	677,526	$	604,322	$	32,236	$	636,558
Gross profit		270,721		13,445		284,166		236,432		13,589		250,021
Depreciation and amortization		22,316		1,119		23,435		21,739		1,256		22,995


	Nine Months Ended
	November 2,						November 3,
	2019						2018
	RH Segment		Waterworks		Total		RH Segment		Waterworks		Total
Net revenues	$	1,881,412	$	101,049	$	1,982,461	$	1,737,933	$	96,829	$	1,834,762
Gross profit		769,133		42,805		811,938		687,643		40,055		727,698
Depreciation and amortization		72,490		3,455		75,945		61,448		3,486		64,934

Summary of Balance Sheet Metrics as Required Under ASC 280 - Segment Reporting

The following table presents the balance sheet metrics as required under ASC 280—Segment Reporting (in thousands):


	November 2,						February 2,
	2019						2019
	RH Segment		Waterworks		Total		RH Segment		Waterworks		Total
Goodwill ⁽¹⁾	$	124,376	$	—	$	124,376	$	124,379	$	—	$	124,379
Tradenames, trademarks and domain names ⁽²⁾		48,563		37,459		86,022		48,563		37,459		86,022
Total assets		2,218,772		143,241		2,362,013		2,273,951		149,067		2,423,018

(1)	The Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively.

(2)	The Waterworks reporting unit tradename is presented net of an impairment charge of $14.6 million recorded in fiscal 2018.

Schedule of Segment Operating Income and Income Before Income Taxes

The following table presents segment operating income and income before income taxes (in thousands):


	Three Months Ended				Nine Months Ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
Operating income:
RH Segment	$	86,936	$	60,853	$	260,429	$	185,705
Waterworks		825		222		2,839		(6)
Asset impairments and change in useful lives		(1,031)		(3,411)		(7,052)		(3,411)
Reorganization related costs		(1,075)		(7,564)		(1,075)		(9,285)
Recall accrual		2,053		(3,986)		3,988		(2,668)
Asset held for sale gain		1,529		—		1,529		—
Legal settlements		—		—		1,193		5,289
Impact of inventory step-up		—		—		—		(380)
Distribution center closures		—		(3,886)		—		(3,046)
Income from operations		89,237		42,228		261,851		172,198
Interest expense—net		21,564		17,695		67,195		48,260
Loss on extinguishment of debt—net		6,857		—		5,903		917
Income before income taxes	$	60,816	$	24,533	$	188,753	$	123,021

Net Revenues

The Company classifies its sales into furniture and non-furniture product lines. Furniture includes both indoor and outdoor furniture. Non-furniture includes lighting, textiles, fittings, fixtures, surfaces, accessories and home décor. Net revenues in each category were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
Furniture	$	467,524	$	418,895	$	1,349,861	$	1,201,737
Non-furniture		210,002		217,663		632,600		633,025
Total net revenues	$	677,526	$	636,558	$	1,982,461	$	1,834,762